30 years of financial deregulation

[SHRED]

Anyone else find it odd that the narrative that Republicans push as the cause for the housing crash...you know...that the poor, undereducated, and people wanting to purchase homes for the first time somehow outsmarted Wall St and the entire banking industry by tricking them into getting homes they could not afford?

...Republicans point the finger firmly at Fannie Mae, Freddie Mac, and other government-sponsored enterprises that supported housing loans by providing guarantees of various kinds. They are right that Fannie and Freddie were “too big to fail,” which enabled them to borrow more cheaply and take on more risk – with too little equity funding to back up their exposure.

But, while Fannie and Freddie jumped into dubious mortgages (particularly those known as Alt-A) and did some work with subprime lenders, this was relatively small stuff and late in the cycle (e.g., 2004-2005). The main impetus for the boom came from the entire machinery of “private label” securitization, which was just that: private. In fact, as Acemoglu points out, the powerful private-sector players consistently tried to marginalize Fannie and Freddie and exclude them from rapidly expanding market segments.

The FCIC Republicans are right to place the government at the center of what went wrong. But this was not a case of over-regulating and over-reaching. On the contrary, 30 years of financial deregulation, made possible by capturing the hearts and minds of regulators, and of politicians on both sides of the aisle, gave a narrow private-sector elite – mostly on Wall Street – almost all the upside of the housing boom.

The downside was shoved onto the rest of society, particularly the relatively uneducated and underpaid, who now have lost their houses, their jobs, their hopes for their children, or all of the above. These people did not cause the crisis. But they are paying for it.

http://www.project-syndicate.org/commentary/johnson16/English

[edhopper]

1. This is one of their big Zombie Lies

Like trickle down tax cuts they repeat it no matter how often it is disproved.

[Bigmack]

2. True.. and general knowledge..

among people who can read. For Repubs, however, it interferes with their wonderful fantasy world, so therefore.....

I had an acquaintance send me the rightwingnut email about Fannie and Freddie causing the whole thing. I sent him all the rebuttals. He wrote back saying F & F had caused the whole thing. No proof.

[DCBob]

3. Yeah, the RW has been pushing the idea that poor people buying homes caused the crisis.. its BS.

Not doubt there was some of that but the real culprit was the out-of-control real estate speculation by almost everyone and the encouragement of it by all sectors of the financial and real estate industry and the further out-of-control exploitation of those risky loans by Wall Street in even more risky investments known as derivatives. It was monster ponzi scheme that finally came crashing down. If there is anyone to blame is was the adminstration in charge at the time who should have been monitoring this situation and impossed some restrictions to reel it in.

[DCKit]

4. It is my impression that Fannie and Freddie only got involved with specious financing...

because the (R) majority Congress and Administration demanded they do so.

F&F had money, Wall St. and the Banksters wanted it, and it got them off the hook for hundreds of billions more in bad debt.

[SHRED]

5. It appears that way

Falls inline with the big monied interests that obviously have way too much influence over what is suppose to be "our" government.

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